Palo Alto Networks (PANW) AI Stock Analysis

• Market Cap: $146.99B
• Dividend Yield: N/A
• Average Volume (3M): 5.14M
• Price to Earnings (P/E): 135.7
• Beta (1Y): 1.24
• Revenue Growth: 14.87%
• EPS Growth: -57.43%
• Country: US
• Employees: 15,758
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.95
• Shares Outstanding: 676,870,900
• 10 Day Avg. Volume: 4,314,901
• 30 Day Avg. Volume: 5,140,896
• PEG Ratio: -1.76
• Price to Book (P/B): 14.70
• Price to Sales (P/S): 12.47
• P/FCF Ratio: 30.95
• Enterprise Value/Market Cap: 0.82
• Enterprise Value/Revenue: 13.08
• Enterprise Value/Gross Profit: 17.81
• Enterprise Value/Ebitda: 62.13
• 1Y Price Target: $221.91
• Price Target Upside: 1.67% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 37

• Rating: 78 Outperform
• Price Target: $244.00 ▲(11.79% Upside)

Palo Alto Networks' strong financial performance and positive earnings call sentiment are the most significant factors driving the score. While technical indicators support a stable outlook, the high valuation suggests caution. The company's strategic focus on next-generation security and AI-led innovation positions it well for future growth, despite some challenges.

Positive Factors

Revenue Growth

Achieving a $10 billion revenue run rate highlights the company's strong market position and consistent demand for its cybersecurity solutions, indicating robust growth potential.

Next-Generation Security ARR Growth

The substantial growth in Next-Generation Security ARR underscores Palo Alto Networks' successful innovation and adaptability in the evolving cybersecurity landscape, ensuring long-term revenue streams.

Operating Margin Expansion

The expansion of operating margins reflects improved operational efficiency and cost management, enhancing profitability and financial stability over the long term.

Negative Factors

Net Profit Margin Decline

A significant decline in net profit margin indicates challenges in maintaining profitability, which could affect the company's ability to reinvest in growth and innovation.

Inventory and Manufacturing Challenges

Inventory and manufacturing issues can lead to increased costs and inefficiencies, potentially affecting product availability and customer satisfaction in the long term.

Identity Market Challenges

The competitive and fragmented identity market poses challenges for gaining market share, potentially limiting growth in this segment despite strategic efforts.

Palo Alto Networks Business Overview & Revenue Model

Company Description

Palo Alto Networks, Inc. (PANW) is a global cybersecurity leader specializing in providing advanced security solutions for enterprises, service providers, and government entities. The company operates primarily in the cybersecurity sector, delivering a comprehensive suite of products and services that include next-generation firewalls, cloud-based security, endpoint protection, and threat intelligence. With a focus on innovation, Palo Alto Networks aims to protect organizations from cyber threats through its integrated platform that spans across various environments, including on-premises, cloud, and hybrid infrastructures.

How the Company Makes Money

Palo Alto Networks generates revenue primarily through the sale of its cybersecurity products and associated subscription services. The company operates on a recurring revenue model, which includes subscription offerings for its software and services, as well as hardware sales of its next-generation firewalls. Key revenue streams include subscriptions for its cloud security, endpoint protection, and threat intelligence services. Additionally, Palo Alto Networks benefits from professional services, such as consulting and training, which further enhance its revenue. The company has established significant partnerships with technology providers and system integrators that bolster its market presence and expand its reach, thus contributing to its earnings.

Palo Alto Networks Financial Statement Overview

Summary

Palo Alto Networks demonstrates strong financial health with consistent revenue growth and robust cash flow generation. The company maintains a solid balance sheet with low leverage, although profitability has faced some pressure with a decrease in net profit margin.

Income Statement

Palo Alto Networks has demonstrated strong revenue growth, with a 3.9% increase in the latest year, building on previous growth. The gross profit margin is robust at 75.2%, indicating efficient cost management. However, the net profit margin has decreased to 12.3% from 32.1% the previous year, primarily due to a significant drop in net income. The EBIT and EBITDA margins have improved, reflecting better operational efficiency.

Balance Sheet

The company's balance sheet shows a healthy debt-to-equity ratio of 0.043, indicating low leverage and reduced financial risk. The return on equity has decreased to 14.5% from 49.9%, suggesting a decline in profitability relative to shareholder equity. The equity ratio is strong, reflecting a solid capital structure with stockholders' equity making up a significant portion of total assets.

Cash Flow

Cash flow analysis reveals a strong free cash flow growth rate of 23.8%, indicating effective cash generation. The operating cash flow to net income ratio is 0.47, and the free cash flow to net income ratio is 1.0, highlighting efficient cash conversion and a strong ability to generate cash relative to net income.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	9.22B	9.22B	8.03B	6.89B	5.50B	4.26B
Gross Profit	6.77B	6.77B	5.97B	4.98B	3.78B	2.98B
EBITDA	1.94B	1.94B	1.28B	869.00M	95.60M	-46.60M
Net Income	1.13B	1.13B	2.58B	439.70M	-267.00M	-498.90M
Balance Sheet
Total Assets	23.58B	23.58B	19.99B	14.50B	12.25B	10.24B
Cash, Cash Equivalents and Short-Term Investments	2.90B	2.90B	2.58B	2.39B	3.63B	2.90B
Total Debt	338.20M	338.20M	1.34B	2.27B	3.95B	3.54B
Total Liabilities	15.75B	15.75B	14.82B	12.75B	12.04B	9.48B
Stockholders Equity	7.82B	7.82B	5.17B	1.75B	210.00M	763.60M
Cash Flow
Free Cash Flow	3.72B	3.47B	3.10B	2.63B	1.79B	1.39B
Operating Cash Flow	3.72B	3.72B	3.26B	2.78B	1.98B	1.50B
Investing Cash Flow	-2.20B	-2.20B	-1.51B	-2.03B	-933.40M	-1.48B
Financing Cash Flow	-778.90M	-778.90M	-1.34B	-1.73B	-806.60M	-1.10B

Palo Alto Networks Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 218.27
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Positive. The current price of 218.27 is above the 20-day moving average (MA) of 213.06, above the 50-day MA of 203.68, and above the 200-day MA of 190.67, indicating a bullish trend. The MACD of 4.22 indicates Negative momentum. The RSI at 60.71 is Neutral, neither overbought nor oversold. The STOCH value of 72.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PANW.

Palo Alto Networks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PANW	―	$146.99B	135.72	17.45%	―	14.87%	-57.43%
FTNT	―	$64.53B	33.61	165.17%	―	14.46%	48.06%
CHKP	―	$21.62B	21.86	34.19%	―	6.31%	25.27%
ZS	―	$50.81B	―	-2.70%	―	23.31%	31.04%
CRWD	―	$136.90B	―	-8.99%	―	23.46%	-270.07%
CYBR	―	$26.07B	―	-10.35%	―	39.45%	-982.51%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Palo Alto Networks Corporate Events

Palo Alto Networks Advances Merger with CyberArk

On July 30, 2025, Palo Alto Networks announced a merger agreement with CyberArk Software Ltd., with CyberArk to become a wholly owned subsidiary. The merger’s progress was marked by the early termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period on September 24, 2025, though it still awaits further regulatory approvals and shareholder consent.

The most recent analyst rating on (PANW) stock is a Buy with a $225.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks’ Earnings Call Highlights Robust Growth

Palo Alto Networks’ recent earnings call exuded a positive sentiment, underscored by strong financial performance and significant growth in key areas. The company reported notable achievements in revenue, ARR, and large deals, emphasizing its strategic focus on next-generation security and platformization. Despite facing challenges in inventory management and the competitive identity market, the highlights of the call clearly outweighed the lowlights, painting an optimistic picture for the company’s future.

Palo Alto Networks’ CyberArk Acquisition: Navigating Integration Challenges and Competitive Pressures

The acquisition of CyberArk by Palo Alto Networks is expected to significantly alter the company’s business landscape, introducing several incremental risks, including heightened competition. This expansion necessitates substantial integration efforts, which may divert senior management’s focus from daily operations and create uncertainty among employees, partners, and customers. The integration process poses challenges in aligning business practices and systems, potentially disrupting existing relationships and delaying the realization of anticipated synergies. Furthermore, entering a new product category could intensify competitive pressures, potentially impacting sales, operating costs, and overall financial performance.

Palo Alto Networks Reports Strong Fiscal Year 2025 Results

Palo Alto Networks is a global leader in AI-powered cybersecurity solutions, providing comprehensive security services across networks, cloud, and security operations. The company is known for its innovative approach to protecting digital environments and its commitment to platformization, which helps enterprises streamline security at scale.

Palo Alto Networks Announces Leadership Changes and Growth

On August 18, 2025, Palo Alto Networks announced significant changes in its leadership and governance structure. Nir Zuk resigned as Chief Technology Officer and director, while Lee Klarich was appointed to the board and as Chief Product and Technology Officer. The company also reported strong financial results for the fiscal year 2025, with a 16% increase in fourth-quarter revenue and a 15% rise in annual revenue, reaching $9.2 billion. The company continues to demonstrate robust growth and operational efficiency, positioning itself well for future expansion.

The most recent analyst rating on (PANW) stock is a Buy with a $200.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks Announces Merger with CyberArk

On July 30, 2025, Palo Alto Networks entered into a merger agreement with CyberArk Software, whereby CyberArk will become a wholly owned subsidiary of Palo Alto Networks. The merger, subject to customary closing conditions and regulatory approvals, involves CyberArk shareholders receiving shares of Palo Alto Networks and cash. The merger aims to strengthen Palo Alto Networks’ position in the cybersecurity sector, with both companies’ boards unanimously approving the agreement. Termination fees are outlined for specific circumstances, ensuring commitment to the merger process.

The most recent analyst rating on (PANW) stock is a Buy with a $200.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks Announces Merger with CyberArk

On July 30, 2025, Palo Alto Networks announced a merger agreement with CyberArk Software Ltd., aiming to enhance its platformization strategy by integrating identity security. The merger is expected to be accretive to revenue growth and gross margin immediately post-close, with significant synergy potential through cross-selling opportunities to Palo Alto’s extensive customer base.

The most recent analyst rating on (PANW) stock is a Buy with a $217.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.